Salesforce Trading Strategy

Salesforce.com (CRM) peaked at $311.75 on November 9, 2021, and then declined by 40.8% to $184.44 on February 24, 2022. The cloud-based customer relationship software company has been below a death cross formation since January 28, 2022. The stock held its 200-week simple moving average, or reversion to the mean, at $191.29 during the week of February 25, 2022.

Salesforce focuses on artificial intelligence software on cloud, mobile and social platforms. The stock is not cheap. Its p/e ratio is elevated at 81.26% and it does not offer a dividend, according to Macrotrends.

The company has beaten earnings-per-share estimates in twenty consecutive quarters.

The Daily Chart for Salesforce.com

The daily chart shows that Salesforce was in a strong rally, up 52.6% from the March 25, 2021 low of $204.17 to the November 9, 2021 high of $311.75. The downside from this high to the February 24, 2022 low of $184.44 was 40.8%.

There was a golden cross set on July 14, 2021, when the 50-day simple moving average rose above the 200-day simple moving average. This led to the November 9, 2021, high.

There was a death cross set on January 28, 2022, when the 50-day SMA fell below the 200-day SMA. The price gap lower on December 1, 2021, occurred on a negative reaction to earnings reported after the close on November 30.

The horizontal lines on the chart from top to bottom are the semiannual risky level at $291.41. The quarterly risky level is just below this level at $290.87.

The middle two horizontal lines are the monthly risky level at $260.37 and the annual pivot at $242.32. The lowest horizontal line is this week’s value level at $201.97.

The Weekly Chart for Salesforce.com

The weekly chart for Salesforce ended last week positive but there could be a downgrade this week. The stock is below its five-week modified moving average at $213.80. The stock is above its 200-week simple moving average or reversion to the mean at $192.89. The 12x3x3 weekly slow stochastic reading is rising at 23.85 moving above the oversold reading of 20.00.

Trading Strategy: Buy Salesforce on weakness to its 200-week SMA or reversion to the mean at $192.89. Reduce holdings on strength to its annual pivot at $242.32.